State of world economy & trade in 2006 – WTO reports
12 Apr '07
4 min read
A further sign of high global liquidity is the rise in global foreign exchange reserves and the advanced re-payment of external public debt by a number of developing countries. Debt levels, measured by the outstanding debt to GDP ratios, decreased in all developing regions partly due to debt forgiveness. For the heavily indebted poor countries the debt levels in 2006 are estimated to have come down to half the level reported five years ago.
The real effective exchange rate of the US dollar continued to depreciate moderately, contributing to the readjustment of the US current account deficit (the trade deficit in goods and services). The exchange rates of the Asian economies with large current account surpluses fared differently in 2006. On an annual average basis, real effective exchange rates appreciated significantly in the case of the Republic of Korea and Singapore and moderately in the case of China.
High global liquidity and a further steep rise in the price of fuels and nominal interest rates has not so far translated into higher domestic inflation rates. In developed markets consumer price increases averaged between 2% and 3%, and in the developing economies the rate was about 5%.
The strong global macro-economic situation in 2006 provided a favourable framework for the expansion of international trade. In 2006, world merchandise exports grew in real terms (i.e. at constant prices) by 8.0%, compared to 6.5% in the preceding year.
A large part of this trade acceleration can be attributed to the marked recovery in Europe's export and import growth. Higher prices of fuels and metals led to a stagnation in the quantity of mining products traded internationally but the higher export earnings of oil exporters resulted in import growth in excess of the world average. High energy prices also invigorated demand for mining equipment and investment in machinery with high energy efficiency.
China's merchandise trade expansion remained outstandingly strong in 2006. Office and telecom equipment continued to be the mainstay of Chinese export growth but significant gains in world market shares in 2006 could be observed in “traditional” exports such as clothing and “new” products such as iron and steel.
Chinese imports again rose faster than global trade but continued to lag behind export growth.
Click here to view Textiles & clothing trade developments in 2006 - WTO reports
Click here to view Trade prospects for 2007 - WTO reports
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